This study examined how state expenditure on home- and community-based services (HCBS) and individual factors are associated with caregiver stress. A total of 1,849 cases from the 2004 National Long-Term Care Survey were included. Gender, education, perceived physical strain, and economic hardship, as well as the number of limitations in instrumental activities of daily living (IADL) for the care recipient, were associated with caregiver stress. The cross-level interaction between service utilization and state expenditure on HCBS was significant, suggesting that living in states with a higher expenditure on HCBS is associated with reduced stress regardless of service utilization.